Impact of Transformational Leadership on Job Performance through the Mediating Role of Work Engagement: An Empirical Evidence from Islamic Banking Sector

Abstract

This study investigates the impact of transformational leadership on the job performance with particular emphasis on the mediating role of work engagement. The study has been conducted on Islamic Banking Sector and respondents have been taken from Islamic banks operating in Karachi. Like other sectors banking is also facing significant challenges, including heavy workloads limited resources and declining employee engagement, all of which adversely affect the performance expectation and quality of customer care. In this context, transformational leadership has emerged as an important leadership approach capable of enhancing employees’ motivation, psychological well-being, and organizational commitment. Drawing upon Transformational Leadership Theory and the Job Demands-Resources (JD-R) Theory, the study examines how transformational leadership behaviors influence employees’ work engagement and subsequently improve the job performance.

The research adopts a quantitative, explanatory and cross-sectional research design. Primary data were collected from non-managerial staff working in Islamic banking sector in Karachi using convenience sampling method while using a well-structured questionnaires based on validated measurement likert scale. A total of 400 questionnaires were distributed, out of which 336 usable responses were obtained. The study employed Partial Least Squares Structural Equation Modeling (PLS-SEM) using Smart PLS software to test the hypothesized relationships among transformational leadership, work engagement and job performance.

The findings of the study indicate that transformational leadership has a positive and significant impact on employee’ job performance and work engagement. Furthermore, work engagement was found to positively influence employee’ job performance and significantly mediate the relationship between transformational leadership and job performance. The results suggest that transformational leaders enhance employees’ vigor, dedication, and absorption at work, which subsequently improves their effectiveness, commitment, and overall performance in healthcare settings.

The study contributes theoretically by extending the application of Transformational Leadership Theory and JD-R Theory within the Islamic banking sector of Karachi. Practically, the findings provide valuable insights for banking sector administrators and policymakers regarding the importance of leadership development initiatives aimed at strengthening employee engagement and performance. Improved employee performance ultimately contributes to enhanced customer care quality, organizational effectiveness, and productivity in Islamic banking sector of Karachi.